United States: Trademark Cancelled Because Software Used As A Conduit For Providing Services Over The Internet Is Not A Good In Trade

In Lens.com, Inc. v. 1-800 Contacts, Inc., No. 11-1258 (Fed. Cir. Aug. 3, 2012), the Federal Circuit affirmed the cancellation of Lens.com, Inc.'s ("Lens.com") LENS mark because Lens.com had not used it in commerce in connection with software.

Lens.com sells contact lenses and related products online.  Lens.com held the registration for the mark LENS in connection with "computer software featuring programs used for electronic ordering of contact lenses in the field of ophthalmology, optometry and opticianry."  Slip op. at 2 (citation omitted).  It obtained the mark during settlement of a proceeding against Wesley-Jessen Corporation, the mark's original registrant.

1-800 Contacts, Inc. ("1-800 Contacts") filed for cancellation of Lens.com's LENS mark, and the TTAB granted SJ on the issue of abandonment on the ground that Lens.com's software is incidental to its sale of contact lenses and is not itself a good in the market place.  The TTAB denied Lens.com's motion for reconsideration, and the PTO cancelled the registration.

On appeal, the Federal Circuit first acknowledged that "use in Commerce" under 15 U.S.C. § 1127 does not require actual sale of the goods, provided that the goods are transported in commerce.  The Court held that an element of public awareness of the use is necessary to establish ownership rights in a mark through transportation, explaining that an article is not a good in trade when it is simply the conduit through which the applicant renders services.

Although "the distribution of Software over the internet can satisfy the jurisdictional predicate for 'use of commerce' . . . [,] whether consumers actually associate a mark with software, as opposed to other services, is a factual determination that must be conducted on a case-by-case basis."  
Slip op. at 9.

Addressing whether software used to provide services over the Internet "is an independent good in commerce, or is merely incidental to the . . .  services," the Court held that although "the distribution of Software over the internet can satisfy the jurisdictional predicate for 'use of commerce' . . . [,] whether consumers actually associate a mark with software, as opposed to other services, is a factual determination that must be conducted on a case-by-case basis."  Id. at 9.  The Court identified as relevant factors "whether the software:  (1) is simply the conduit or necessary tool useful only to obtain applicant's services; (2) is so inextricably tied to and associated with the service as to have no viable existence apart therefrom; and (3) is neither sold separately from nor has any independent value apart from the services."  Id.

The Federal Circuit reasoned that Lens.com's software is merely the conduit for its online retail services because customers use the website and its software only to avail themselves of those retail services.  The Court noted the lack of evidence that the software had any independent value apart from rendering the retail service.  Determining there was also a lack of evidence of any customer awareness that the LENS mark was used in connection with software, the Court rejected Lens.com's argument that there was a genuine issue of material fact on that issue. 

Finally, the Court rejected Lens.com's argument that the TTAB erroneously relied solely on Lens.com's specimens of use as grounds for cancellation.  The Court determined that the TTAB had properly relied on the entire application file as directed by the TTAB's regulations.  The Court therefore affirmed the TTAB's holding of abandonment and SJ cancellation of the LENS mark.

This article previously appeared in Last Month at the Federal Circuit, September, 2012.

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